Henderson was ambassador at the time of the 1938 Munich Agreement, and counselled Prime Minister Neville Chamberlain to enter into it. Shortly thereafter, he returned to London for medical treatment, returning to Berlin in ill-health in February 1939 (he would die of cancer less than four years later).[5]

After Wehrmacht troops on 15/16 March 1939 occupied the remaining territory of the Czechoslovak Republic in defiance of the Agreement, Chamberlain spoke of a betrayal of confidence and decided to withstand German aggression. Henderson handed over a protest note and was intermittently recalled to London. On the eve of World War II, Henderson came into frequent conflict with Alexander Cadogan, Permanent Undersecretary of the Foreign Office. Henderson argued that Britain should go about rearmament in secret, as a public rearmament would encourage the belief that Britain planned to go to war with Germany. Cadogan and the Foreign Office disagreed.[citation needed]

With the signing of the Molotov–Ribbentrop Pact on 23 August 1939 and the Anglo-Polish military alliance two days later, war became imminent. On the night of 30 August, Henderson had an extremely tense meeting with German Foreign Minister Joachim von Ribbentrop. Ribbentrop presented the German "final offer" to Poland at midnight, and warned Henderson that if he received no reply by dawn, the "final offer" would be considered rejected. "When Ribbentrop refused to give a copy of the German demands to the British Ambassador at midnight of 30–31 August 1939, the two almost came to blows. Ambassador Henderson, who had long advocated concessions to Germany, recognised that here was a deliberately conceived alibi the German government had prepared for a war it was determined to start. No wonder Henderson was angry; von Ribbentrop on the other hand could see war ahead and went home beaming."[6]

While negotiating with the Polish ambassador Józef Lipski and advising accommodation over Germany's territorial ambitions – as he had during the AustrianAnschluss and the occupation of Czechoslovakia – the Nazis staged the Gleiwitz incident and the Invasion of Poland began on 1 September. It was Henderson who had to deliver Britain's final ultimatum on the morning of 3 September 1939 to Minister Ribbentrop, stating that if hostilities between Germany and Poland did not cease by 11 a.m. that day, a state of war would exist. Germany did not respond, and Prime Minister Chamberlain declared war at 11:15 a.m. Henderson and his staff were briefly interned by the Gestapo before finally returning to Britain on 7 September.

After returning to London, Henderson asked for another ambassadorship, but was denied. He wrote Failure of a Mission: Berlin 1937–1939, which was published in 1940, in which he spoke highly of some members of the Nazi regime, including Hermann Göring, but not von Ribbentrop. He had been on friendly terms with members of the Astors' Cliveden set, which also supported appeasement. Henderson wrote in his memoirs how eager Prince Paul had been to illustrate his military plans to counter Mussolini's projected assault on Dalmatia, when the main body of the Italian Army had been sent overseas.[7]